9GAG — Competitive Analysis
Article Structure
- What is 9gag? — Quick background on the company/apps
- Fundamental Strategy — What is the target customer with the under-served needs & the revenue streams
- Value Proposition — What values that the apps want to convey to the customer
- Metrics That Matter Most (MTMM)
- Feature Set — Top 2 most interesting feature set and proposed solution for the same problem
- Revenue Analysis September 2018 — How much rate of revenue do they make
- Conclusion & Possible direction
What is 9gag?
9gag was founded on 2008 and serve as a platform to share funny images. Today, 9gag users can read and share their contents in the form of video & gif, on top of images.
Fundamental Strategy
Target Customer
9gag is a 3-sided marketplace that consist of the readers, content creators and advertisers. The readers & content creators are core users of 9gag. Meanwhile, advertisers come from native advertising and Facebook Ad Network.
First side of 9gag core users are the readers. They are anyone who have internet access & enjoy browsing internet as a form of quick-&-easy entertainment. The keyword here is “quick-&-easy” which will be explained further below. The limit of this user segment is huge, as there are more than 3.2 billion people with access to 3G (13).
Content creators are similar to typical forum contributors. They usually want to contribute due to sense of “giving back” to the community and feeling of contribution (3). Some indie developers and probably a few of game/entertainment publishers are making some contents for free advertisement.
Revenue streams
There are 2 revenue stream which are advertisement and 9gag Pro. Advertisement are divided further into ad network and native advertisers (4). 9gag Pro is currently priced around USD 2.5–3.5 depends on the area.
Value proposition
There is no value proposition that they formally state. However, from the observation & discussion with some 9gag users, the value propositions are
- for readers: quick-and-easy entertainment
- for content creators: platform to share interesting contents
Quick-and-easy entertainment
Quick-and-easy entertainment means 9gag is a form of passive entertainment that yields instant gratification, without commitment or preparation time required.
This is different from other form of entertainments such as reading a book or gardening. When you want to read a book, you know that you will commit time to read it and it takes more time before you get entertained by it. For gardening, well, you need to buy many items, actively tending the plants and thinking about what to prepare when you are ready to take that 2 weeks vacation.
It does not mean that 9gag reader and someone who love to tend plants are 2 different people. It is possible that they are the same people, doing those activities in 2 different times. Multiple surveys that happened in 9gag comment sections show that most of the users are either on study/workplace, toilet or on the bed before sleeping.
Platform to share interesting contents
Since 9gag does not make their own contents, it is important that people who have a funny content or idea feels that they should post in this platform. This can be analysed by comparing motivation vs friction to post.
To think about motivation to post, we can use Maslow Pyramid (picture below). 9gag chose not to reward the writers with money, unlike Webtoon (7) so the motivation needs to come from higher hierarchy which are belonging, esteem & self-actualization. However, this means that people will not do this full time, hence equal to less-time for complex contents (such as original comics)
Friction not to post can be contributed due to not having funny content or because of friction required to create the content. The first one is difficult to change as it changes people behavior (from not having content to having content). The second one is easier to do.
Friction to create content can be reduced through template generator (drawing comics through predetermined arts/ meme template). Unfortunately, it can also be done by making sure re-uploading someone else content is easy (for example, deleting 9gag watermark) which brings down the value of original content creation (8)
Metrics That Matter Most
We are using Pirate Metrics (AARRR metrics) for this analysis. They are Acquisition, Activation, Retention, Revenue, and Referral.
Metrics That Matter Most (MTMM) depends on startup nature (social media, B2B, subscription) and startup stage. For 9gag, the stage should goes as follow: Retention, Activation, Referral, Acquisition then Revenue. Currently, we are looking at Revenue stage as 9gag has generated revenue through ads.
MTMM sequence above was based on this reasoning: “Retention is the first one because it ensures that new users will stick and grow the user base. Then, Activation means those users who come to 9gag from anywhere actually converts to be active users. Next, 9gag is free entertainment with network effect which means that Referral is a cheap way for acquisition. After that, Acquisition through non-referral method can be promoted to grow user intake. Lastly, 9gag can monetize the traffic to generate Revenue.”
Breaking down Revenue to actionable piece
Before looking at the features, we need to breakdown the revenue into smaller pieces. From there, we will understand the equation that affects revenue and try to improve each components.
Revenue = Ads Revenue + 9gag Pro Revenue
Ads Revenue = Number of User * Impression/User * eCPM
- eCPM = ads revenue per mile (thousand) ads impression
- Number of User = (Activated User) * (Retention Rate) * (1 + Referral Rate)
- Impression/User = Page Visit/ User * Ads count / Page * Fill Rate
9gag Pro Revenue = Price for Subscription * 9gag Pro users
- 9gag Pro users = Number of User * Conversion Rate
Feature Set
User story: As a reader, I want to see posts that are relevant to my humor sense so I enjoy the posts more
People humor sense change from time to time. For example, jokes about workplace is more relevant if you are working or having an internship. Thus, 9gag split the content based on common sub-groups. Relevancy umbrella has 2 key metrics related to revenue which are:
- Page visit/ user
- Retention Rate
To have a better relevancy than these sub-groups, there are several problems:
- User generated groups: 9gag is not a forum whereby content creators can keep creating new niche groups. Finding those niche groups are even bigger friction for content creators & readers alike
- Taxonomy: If it is up to editors to break down the groups, editors will be faced with taxonomy problem. Once you break down group into small pieces, taxonomy complexity quickly increases. For example, it is easy to specify that your post is about “working”. However, what if you are requested to choose between “bad boss” or “gaming at work”, these 2 groups are not mutually exclusive.
- Friction: relevancy requires content creator to specify what is the theme of this humor. Unfortunately, the more refined the selection is, the higher the friction will be for content creators.
9gag solution to this two-sided problem is tagging system.
- Objective: When a reader found a post that is interesting, they can find similar humor topic by tapping on the tags. On top of that, 9gag put trending tags at the Home screen
- User generated groups: while it is user-generated, tagging is optional and listings can still be accessed through predefined sub-groups
- Taxonomy: Tags are not mutually exclusive so it solves taxonomy issue
- Friction: Content creators can add optional tagging to their post and 9gag can add auto-tag if content creator did not add any tagging.
Proposed Solution: As a reader, I want to see posts that are relevant to my humor sense so I enjoy the posts more
To increase content relevancy, there are some additional features that can help
- Filter out irrelevant topics
As a place to share interesting items, some people found extraordinary food pictures are interesting to look at. However, a lot of people find it to instagram-y and you can find the complain under posts’ comment section. - This problem can be solved by adding filter-by-topics at the top of home screen or “I want to see less of this post” in each post. Example below is how Facebook increases relevancy.
- (Scraped by 9gag) Subscription to content creator — thread
It sounds like a failed A/B test result because it is in the FAQ but not all users can see it.
Proposed Solution: As a reader, I want additional Pro features so I have more reasons to buy it
For now, the main benefit for 9gag pro is listed in their FAQ (10)

Going back to 9gag value proposition which is quick-and-easy entertainment, you do not always have internet connection or abundant data bundle. Since 9gag Pro can be viewed without ads, it should be possible for users to pre-download 9gag contents and view it online while you still have good Wi-Fi.
Revenue Analysis September 2018
Revenue = Ads Revenue + 9gag Pro Revenue
Revenue = 1.76 mil/month + 0.12 mil/month
Revenue = 1.88 mil/month
The calculation will be presented below.
Available Public Data
From 9gag website (4), we can learn that
- Registered User = 40 million
- Total Page Views= 3.5 billion/ month
- Web bounce rate of 44%
- Price for 9gag Pro = USD 2.5–3.5 based on geolocation
Ads Revenue
We need to tweak the formula a bit because of how the public data is formatted
Ads Revenue = Number of User * Impression/User * eCPM
- Impression/User = Page Visit/ User * Ads Count / Page * Fill Rate
- Total Page Views = Number of User * Page Visit/User = 3.5 billion/month
Thus, the formula can be tweaked to
Ads Revenue = Total Page View * Ads Count/Page * Fill Rate * eCPM
Ads Revenue = 3.5 billion/month * 2 * 0.36 * 0.7/1000
Ads Revenue = USD 1.76 million/month
- Ads Count/Page varies from 0 to 3, I will take rough estimate of 2 per page
- Fill rate = Available Ads rate * (1 — Bounce Rate) * Loaded ads rate = 36%
- Available Ads rate is probably around 80% (in-house ads were noticeable)
- Bounce Rate is 44% (11) meaning 44% of the traffic is out, presumably before ads are loaded
- Loaded ads rate is due to scrolling before ads are loaded, 9gag ads load quite slowly, noticeably more than a few seconds. Let’s take the value of 80%
- To simplify eCPM value, I’m taking
- Middle value of common US mobile eCPM (11) = $1
- 70% of middle value of common US eCPM since a lot of countries have lower eCPM
- We arrive at $0.7 per thousand impression
9gag Pro Revenue
9gag Pro Revenue = Price for Subscription * New 9gag Pro users
9gag Pro Revenue = USD 3 * 40,000/month = USD 120,000/month
- Price for Subscription on average is USD 3
- New 9gag Pro users = New 9gag users * Conversion rate = 2,000,000 * 2% = 40,000/month
- At the current state, taking 5% of growth per month is very optimistic, thus New 9gag users = 5% of 9gag userbase = 5% * 40 million = 2,000,000
- Conversion rate = % of users with Pro label in comment section / 2 = 4%/2 = 2%
- Divided by 2 because assuming 9gag Prod users is more active than normal users
Sanity Check
If 9gag Pro cost USD3 per person, we can check whether ads revenue of 1.76 million/month tally with 9gag Pro price. The idea is that 9gag Pro should cost more than 9gag Pro user lifetime value.
Since we have USD 1.76 million/month that come from 40 million active registered users, each user contributes 4.4 cents/month. Assuming 9gag Pro users are twice as active and contributes 8.8 cents/month. 9gag Pro subscription break even happens after 34 months (~3 years) of continuous usage. This sounds about right!
Conclusion & Possible Directions
- 9gag currently has around 50 employees based LinkedIn, which means that their staff salary is around USD 300,000/month. Taking other staff cost (laptop, etc) & server cost to be double the salary and low marketing cost, we can assume that their cost is around 600,000/month
- With their current revenue of USD 1.88 mil/month, they should be in a healthy position with profit margin of 68%. Thus, they can just be a cash-cow company (by maintaining basic features & uptime) or try to open up additional stream of revenue.
- 9gag has 40 million active users and maximum potential users are 3.2 billion users (all internet users). That means they still can focus on their core features and increase apps penetration rather than expanding to new entertainment fields.
- If they want to open up additional stream of revenue, some of possible strategies are
- Content localisation — with the fact that a lot of countries have their own gag sites (MGAG, SGAG, 1cak, etc), 9gag should be able to strategically acquire/open up local platforms. Local platforms have higher relevancy for its readers
- Game publication — 9gag psychographic can be described as geeks who are looking for entertainments. Thus, 9gag can utilise its own ads slot for in-house gaming publication. The example is 9gag becomes the partner of Redhead Redemption
- Ads as a posting — basically a company can pay 9gag directly so their post is directly sent to hot page or 9gag Instagram/Facebook. This is especially important to monetise 9gag casual users who want to browse 9gag in Instagram/Facebook.
